Wall St wants a clean win

The mood from across the Atlantic ahead of today’s US election is on a knifeedge, like one of those highwire scenes from Tennessee Williams’s Cat On A hot Tin Roof. In Washington, businesses and shops are boarding up their doors because of fears that an inconclusive victory for either President Trump or his rival, Joe Biden, will lead to civil unrest.

Or, in a nightmare scenario, that Trump will stage a sit-in at the White house and refuse to leave.

Similar protective measures are being taken across US cities with horrendous reports from Detroit that voters are stocking up on firearms.

Fears are growing that voting in the socalled battle ground states could swing the election to Trump, despite Biden still being ahead in the national polls.

On Wall Street, there are similar jitters. Most investors are praying for a decisive result – either way – as they are terrified of a contested election or a close count.

Any dispute over the result would trigger volatile trading on the stock markets and months of hairy negotiations.

By contrast, a handsome victory for either side would be good news for stock markets because of the extra spending stimulus packages being promised by Biden, or more tax cuts from Trump. Under Trump, stock markets have risen by 53pc.

Until now, investors have been fairly confident that a Biden ‘Blue Wave’ would sweep the country, and usher in a scenario in which the Democrats take control of the US Senate as well as all of Congress.

Such a decisive victory, they say, would be great for the country as Biden has promised billions going on infrastructure, more support for businesses hurt by the pandemic and going green.

higher spending would benefit construction companies as well as green energy. In turn, this would lead to higher interest rates and a weaker dollar.

however, an indecisive result – or if Biden wins and becomes president but the Senate stays Republican – could hinder his ability to push through a full package of fiscal relief. If that were the outcome, investors will be heading for the hills, hedging their bets by buying more gold or US Treasuries.

A Biden victory would not be all sweetness and light. he has threatened to put up personal taxes on the very wealthy, along with higher corporate taxes and a tougher regulatory environment for business.

he will also have to deal with the fiery Democrat lobby which wants to break the monopoly of the Big Tech giants, if not break them up. Good luck with that one.

Biden will also have to face up to China. So far, the former Vice-President has been inscrutable, saying that he will be tougher on China than Trump but less confrontational, whatever that means.

If the past is a guide, Democrats have typically kowtowed to China.

And what about Biden’s relations with the eU and the UK?

The word is he will cosy up to the eU and give a big nod to integration. he does not have Trump’s liking for Brexit and his Irish Catholic roots mean he is nervous about damaging the Good Friday Agreement, which is why he is said to be also hoping there will be a good UK-eU deal.

But the notion that No10 and Biden are at loggerheads is nonsense. As the UK is the second biggest spender in Nato after the US, the idea that the ‘special relationship’ is over with Biden in the White house is one for the fairies.

There is a third option: a win for Trump and the Democrats controlling Congress. This scenario would have the best from both parties: taxes staying low and a smaller fiscal stimulus.

Only a fool would dare to predict the outcome as voting looks so uncertain.

But it would also be foolish to rule out a Trump win. There is perhaps one sure thing, as Mark Twain quipped: ‘We have the best Congress money can buy.’

Defrosted Brexit

Happily, there are more cheerful vibes coming from across the Channel as Brexit talks reach their end-game.

lord Frost and Michel Barnier are working on a plan which uses ‘zonal attachment’ to solve the spat over fishing quotas.

This would allow British fishermen to catch more fish than they do at the moment, but leaves the precise quotas for eU boats – mainly French – until after the deal is done.

This is sensible: agree to agree and worry about the finer details later.

It’s called kicking the can into the longgrass, or should we say to the bottom of la Manche.